Stocks rallied off of the prior week’s decline, proving once again that amateur investors who took profits at lower prices the prior week were wrong to do so (again).
Amateur investors are notoriously bad at market timing, because they either lack a consistent trading strategy altogether, or follow a strategy that works so infrequently that they do not have a profit-making edge, in which case they fall back on emotional decision-making, which is certain to produce poor results.
The week saw mostly good news – earnings, manufacturing activity, housing starts, etc., that for the moment offset concerns about an impending commercial real estate collapse. Investors for now are cautiously optimistic that the economy might avoid a calamitous recession.
We were correct to hold our long positions, as our analytics had suggested, as many of our long gains increased. Short positions were mixed.
The second quarter of 2023 has proved to be a profitable period for us as stock prices finally moved in a consistent direction for weeks at a time (mostly upward) after a lackluster first quarter in which prices were choppy and/or stagnant. Would be nice to see more of this price movement consistency continue throughout the summer.
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